Small Manufacturer Optimism At Record Levels

Optimism among small UK manufacturers has soared to unprecedented levels, according to new research.

The Confederation of British Industry's (CBI's) latest SME trends survey has shown sentiment at its highest ever recorded rate in the 26-year history of the poll, with 36 per cent more firms expecting their fortunes to improve than anticipated a decline.

Among the key indicators were significant increases in total orders, output and employment levels in the three months to April, with the latter up 16 per cent. Moreover, the number of manufacturing jobs is expected to rise even faster in the next quarter, at 24 per cent.

The rise in export orders by a net balance of nine per cent represented a reversal of the previous three-month period, when these fell by a net seven per cent. The numbers for these are expected to improve further in the coming months, with 26 per cent more firms expecting them to rise than anticipating a drop.

Output saw its third successive quarterly increase, with expectations for the period to July being the strongest since January 1995. While investment intentions are essentially unchanged, plant and machinery purchases are rising at the quickest rate since July 1995.

Commenting on the findings, CBI chief policy director Katja Hall said: "It’s very encouraging to see record levels of optimism among smaller manufacturers, on the back of robust growth in domestic and export orders, and a leap in output levels.

"Hiring is also on the up, and is set to strengthen as we look ahead into 2014."

Such positive sentiment is not just good news for SMEs, but also suggests the UK economy may be starting to enjoy the sort of rebalancing towards manufacturing and exports that policymakers have been seeking.

Last week, the Office for National Statistics provided more evidence that such a trend is emerging when it delivered its estimate for economic growth in the opening quarter of 2014.

While the overall figures indicated a 0.8 per cent rise in gross domestic product, the figure for manufacturing was 1.3 per cent.

Expert Opinion

The CBI’s trend survey is an important barometer of small business sentiment and the implications of the latest figures are there for all to see. It is clear that small manufacturers are responding to the growing confidence emerging in the economy and across the business world, with many looking to a brighter future across the next few months.

"This is undoubtedly the time for small businesses to be thinking about the future and what they envisage their next steps to be. Central to this is ensuring that the right support network is in place to provide them with key advice on maximising their growth potential. This may be through expanding their workforce or considering potential opportunities which arising in terms of exports or marketing products overseas.

"Optimism is high and now is the time to act on it – and we would urge small firms to talk to legal experts on every step of the journey they make."

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